Thursday, September 9, 2010

John Hempton at Bronte Capital recently blogged about the puzzling condition of rising gold prices and falling bond yields. Indeed, we have seen rising commodity prices in the form of the CRB Index (pictured below) and the CRB Raw Materials Index, which is largely composed of nom-traded raw materials, is only 3% from its all-time highs.

Normally, bond yields rise as inflationary expectations rise. But instead of rising yields, we have seen falling bond yields – which is typically associated with deflationary episodes instead of rising inflationary expectations.

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Welcome to my blog Humble Student of the Markets. These are my observations and musings about the markets (mostly equities), hedge funds and investments in general.My experience has been a quantitative equity manager in US, Canada, EAFE and Emerging Markets and commentator on hedge funds and their returns patterns.

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